Twenty-three percent of the world s population lives in these frontier markets, St. Germain tells me

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October, 2011: Fakhre, the Lebanese-born, Havana-based CEO of Coral Capital -- which claimed to have invested $75 million in Cuba, with more than $1 billion worth of projects in the pipeline -- is woken at dawn and arrested unusual travel destinations by Cuban authorities. Coral Capital s offices are shuttered and declared a crime scene. Fakhre has been held without charges ever since.
April, 2012: Coral Capital s COO Stephen Purvis, is picked up by Cuban government agents as he prepares unusual travel destinations to walk his children to school. He too, has been held without charges, and no mention has been made of either case in Cuba s state-run media.
Indeed, Purvis and Fakhre were not beginners -- Coral Capital was formed in 1999 to invest in Cuba and successfully restored Havana s Hotel Saratoga, where rates climb as high as $900 per night. They also opened the island s first Land Rover dealership, which was admittedly a work in progress (they sold a total of one car, to themselves but these things take time).
Coral Capital was not the only foreign company paid back by the Cuban government with a complimentary stay at Villa Marista, the state security torture facility that apparently also doubles as a guesthouse.
Vahe Cy Tokmakjian, CEO of Ontario, Canada s, Tokmakjian Group, which sold buses, trucks, unusual travel destinations and mining equipment to Cuba and served as Cuba s exclusive distributor for Hyundai, was an experienced unusual travel destinations Cuba hand.
I came to Cuba 21 years ago when the times of economic trouble began and, despite my banker s advice, I considered I could trust Cubans; so that s how I came here, why I m here now and why I will continue to be here, he told Cuba Plus , a publication unusual travel destinations produced by Vancouver s Taina Communications in partnership with the Cuban government.
unusual travel destinations To be sure, Tokmakjian, whose company did an estimated $80 million worth of business with the island annually, continues to live in Cuba -- held without charges since September 2011, when he was taken into custody by state security and his company closed. (A second Canadian, Tri-Star Caribbean CEO Sarkis unusual travel destinations Yacoubian , has been held by the Cuban government without charges for almost a year.)
As Fakhre, Purvis, et al (over the past two years, Cuba has sent 52 foreigners, as well as hundreds of Cuban ministers and officials to jail, and has expelled more than 150 foreign business owners unusual travel destinations and operators) have now discovered, part of the reform process appears to include President Raul Castro making good on a 2008 vow to root out the rampant corruption that has been a part of daily life for decades.
A centrally-controlled command economy such as Cuba s, with a near-total lack of transparency, ensures that every act is fraught for anybody trying to exist, from businesspeople to the average Joe, says a diplomatic official who agreed to speak to me anonymously.
One of those, in an interesting reversal of the norm, is what might be referred unusual travel destinations to as a maximum wage law, which reportedly hovers around $20 per month. According to the Economist , Raul Castro considers letting foreign unusual travel destinations firms pay market wages a step too far, forcing companies to break the law -- and run afoul of his newfound efforts to enforce it.
The regime s distaste for markets is easy to understand. Because of the markets, people who had been brought unusual travel destinations up to depend on the state to provide everything had developed unusual travel destinations some economic independence. Customers had learned the importance of price and had learned to choose their purchases, unusual travel destinations while market traders had emerged who had learned the subversive skills of bargaining, procurement, and logistics. People had also learned the usefulness of markets as sources of news and gossip outside official control. The results of decades of ideological work were at risk.
Sometimes, the bribes are blatant, like the free trips abroad, computers, flat-screen TVs or large deposits of cash in foreign bank accounts for senior officials reported by a South American importer doing business in Cuba before he was accused of corruption and expelled in 2009. Other times, they may be inadvertent (a few dollars for gas) or perfectly acceptable in market societies (paying commissions).
And illegal. unusual travel destinations As one Facebook commenter who appears to be acquainted with Stephen Purvis, writes : Steve has meant well by subsidising the marginal salaries unusual travel destinations of Cuban management unusual travel destinations staff -- but we all know that ANY payments of foreign currency to Cubans is strictly prohibited and is regarded as paying bribes.
Some have suggested that the Cuban leadership simply looked at its runaway accounts-payable column and decided unusual travel destinations to have the intelligence unusual travel destinations services buy out the government s foreign partners at an extremely favorable price.
Foreign investors in Cuba have dealt with this before. A backgrounder from the UK Trade Investment office describes the events of early 2009, when the global financial crisis sparked a shortage of hard currency on the island and led Castro to freeze unusual travel destinations the bank accounts of joint ventures operating there. Castro has been slowly paying out the money, estimated at more than $800 million, since then.
Investors in emerging markets -- and emerging emerging markets, commonly known as frontier markets -- tend to be attracted to accordingly outsized returns. For them, the potential rewards of frontier markets means parking their money far -- both literally and figuratively -- from Wall Street or Canary Wharf. (The countries currently included in the MSCI Frontier Market Index are: Argentina, Bahrain, Bangladesh, Bulgaria, Croatia, Estonia, Jordan, unusual travel destinations Kenya, Kuwait, Lebanon, Lithuania, Kazakhstan, Mauritius, Nigeria, Oman, Pakistan, Qatar, Romania, unusual travel destinations Serbia, Slovenia, Sri Lanka, Tunisia, Ukraine, United Arab Emirates, and Vietnam.)
Once a country goes from being a frontier unusual travel destinations market to an emerging market -- and in the case of China, all the way on to a developed market, it can start to focus on sustaining its own wealth within its own economy, says Michael St. Germain , a research unusual travel destinations analyst at Brighton House Associates . And that s when new frontier markets like Kenya, and yes, Cuba, replace them.
If you go back 12 years, most emerging markets were essentially frontiers in one way or another, Stuart Culverhouse , chief economist of frontier market investment banking boutique Exotix unusual travel destinations Ltd ., tells me. As people have become more comfortable with the idea of emerging markets, as the Malaysias, the Turkeys, the Brazils of the world all become more mainstream, it has made investors look beyond those countries to find opportunity.
There s no doubt that frontier-market investing has its risks. Geopolitical risk is the most inherent issue. These burgeoning nations are susceptible to political and social instability, which causes their stock markets to be highly volatile. unusual travel destinations Additionally, investors can find themselves victims of nationalization. Although frontier governments are opening their markets to outsiders, they often remain apprehensive of foreign investment. As companies grow, therefore, and foreign investment and control increases, they are susceptible to nationalization by the government.
Frontier markets also lack infrastructure. Safeguards such as regulatory oversight that are provided by developed and many emerging markets simply do not exist in frontier markets. As a result, investors are exposed to currency corruption and other risks.
unusual travel destinations Perhaps the largest risk, though, is illiquidity. Being small in terms of capitalization and trading volume, frontier markets are by nature illiquid meaning it can be difficult for an investor to extract himself from a position, if not impossible. Although you can buy your way in to these markets, you may never be able to cash out of your position.
In addition, frontier markets, for the most part, do not have many ETFs or index funds, and for those that do exist, the lack of investor demand decreases liquidity further as well as poses the threat of traders selling at a discount. Generally, the main reward for taking such risk is larger returns, albeit significant ones.
Twenty-three percent of the world s population lives in these frontier markets, St. Germain tells me. That number in itself unusual travel destinations is staggering. Plus, the available working population is over 10 years younger unusual travel destinations than those in developed markets. Over the past decade unusual travel destinations or so, the effects of technology and globalization have given these markets the ability to cheaply educate unusual travel destinations their people, and such a ready workforce makes frontiers a logical place to invest long-term.
unusual travel destinations That can mean any one of a number of places. Stuart Culverhouse likes Sub-Saharan Africa. Michael St. Germain likes Nigeria and Sri Lanka. Regarding Cuba, the law doesn t apply to Exotix, which is headquartered in London, unusual travel destinations doesn t do business in the US, and is off-limits to US residents (and, in turn, US regulators). Culverhouse is optimistic over a longer time horizon.
There is a significant scope in the country unusual travel destinations essentially unusual travel destinations untapped, he says. It requires moves both on the Cuban side and the American side; the transition from Fidel to Raul introduced a more pragmatic and commercial agenda and there has been some indication from the US in recent years about a reform agenda, and we have some optimism about where that might lead.
Such endeavors as extralegal payments to staff may be an attempt to speed the change that Kirby Jones , a Washington, DC, consultant described b